The dynamic of today’s world may wrest great importance in the philosophies of inter-personal accountability and liberalism. Many people hold opposing views when it comes to crypto trading. However, nobody can deny the fact that crypto trading has shaken up the world of finance. When the seemingly bottlenecked domain of global banking stood questioned by Satoshi Nakamoto, his views found glorious resonance all over. Cryptocurrency with its decentralized framework started gaining unprecedented momentum. Cryptocurrency purchases and Bitcoin mining activities saw a burgeoning increase. As with all means of currencies, the vast inflow of cryptocurrency also necessitated the creation of a cryptocurrency trading guide. The current article elaborates on some selected aspects of crypto trading to introduce you to the world of digital currency.
Why Would Someone Need A Crypto Trading Guide?
As sensational as its scope might be, the field of cryptocurrency isl incredibly niche. Even though the field of cryptocurrency sees a massive user hike with every passing day, a considerable portion is uninitiated. Subsequently, these traders just ended up hoarding Bitcoins and other relevant currencies to keep up with the hype of it. However, once in their possession they find themselves thoroughly unequipped to commence with a rational barter. This may result in a substantial loss at the owner’s end. With respect to current world denominations, the exchange rate of cryptocurrencies is absolutely exorbitant. A person has to spend a considerable amount of resources in order to gain as few Bitcoins and other currencies. In order to maximize their cryptocurrency investments, a basic knowledge of cryptocurrency trading may be indispensable to many traders.
Cryptocurrency Trading Guide – Basic Strategies
The world of trading is one that requires knowledge and experience. In-depth knowledge of market dynamics along with an acute business sense may come in handy towards sealing a sensible trade. However, skeletal knowledge about the process is enough for people to start trading. So you can understand the basics through this guide and then learn more techniques as and when you start trading. The following section aims to throw light on some strategies that can be kept in mind before starting crypto trading:
Understanding Basic Parameters
One of the things that beginners may consider before taking a deep dive into the exchange market is the parameters they include. The graphs and lines that are associated with every trading front can be a tad bit confusing at first. But, they’re easy to understand once you grasp the basic logic behind them. Some people may proceed with trading in cryptocurrency without understanding what the graphs portray. While you don’t need to be an expert at reading graphs to start crypto trading, a basic understanding of the graphs is always helpful. It may help you take better informed decisions if you understand what the graphs portray.
Japanese Candlestick Charts
Japanese candlestick charts are among the most widely-used cryptocurrency charts in that particular domain. All of the relevant exchange platforms including Bittrex, Binance, and Kucoin make use of this representation itself for the trader’s reference.
Understanding the patterns associated with these Japanese Candlestick charts improves your cryptocurrency chart reading proficiency. A conventional candlestick chart comprises of small quadrilateral blocks of red and green sequenced next to each other. These blocks are what we refer to as the candlesticks. Each candlestick is representative of the price displacement of a particular asset during a set time interval. The physical constitution of a candle consists of one body and two shadows that jut out from its lateral ends.
The girth of the body comments upon the prevalent contrast between the opening and the closing prices. The shadows denote the latitudinal extent (highness and lowness) that the opening and the closing prices have traversed. The polarity of the readings is the opposite of the green and red candlesticks. In the green variant, the upper and lower shadows represent closing and opening prices respectively. The reverse holds true for its red counterpart. The functional effectiveness of the Japanese candlestick charts lies in their immediate lucidity. The patterns exhibited by the red and green candlesticks offer accurate predictions of the fluctuations observed in the market space. The behavior of the market can be charted to a large extent with these candlestick pattern indicators.
Playing The Hodl Strategy
The HODL card is among the traditional moves that anyone can employ in the cryptocurrency trading process. After their initial Bitcoin purchase from coinbase, several buyers resort to playing the HODL card. However, in the space of exchange trading platforms, HODL counts more as an investor’s tendency than a trader’s suit. Simply put, HODL is the action of holding all of your purchases and subjecting yourself to market whims. It is among the most primitive of strategies wherein you actively invest some degree of your assumption in the market’s turns.
Compared to other trading strategies, it can be considered as a relatively failsafe measure. This is owed in large to the massive number of suitors that cryptocurrency has in the exchange market. At no point does the value of your purchased Bitcoin stand to undergo an irrational depreciation. In many ways, the HODL move is akin to undertaking a calculated risk from a trading perspective. With no strenuous effort from your end, you stand to gain immensely from the cryptocurrency’s seemingly market appreciative nature. The deceptive simplicity of the HODL strategy keeps it away from every financial advisor’s paraphernalia of advice. However, some people do believe in its relative market stability and its perceived trading convenience.
Cost averaging is among “sensible measures” that a trader can adopt in the cryptocurrency trading domain. It is a basic trading strategy whose ideology stems from an in-depth understanding of primitive statistics. A budding trader can buy and invest in consistent time intervals to level out to cost. The cryptocurrency trading market is of high-risk and is increasingly volatile at that. It is probably the only market that undergoes swings in the lofty 20%-40% bracket. In order to accommodate these fluctuations and potentially maximize a trader’s profits, cost averaging makes for a supposedly rational cryptocurrency trading scheme. Buying at regular intervals may introduce the probability of counterbalancing a loss that a trader may incur during a market dip.
Locking In Your Profits
While locking in your profits can be considered potentially viable for cryptocurrency trading measures, it can be difficult as well. This is primarily because this approach is largely counterintuitive with respect to general human psychology. This approach may require the trader to sell when the chart is undergoing a steep uphill incremental growth. The tough part lies in the fact that it may not allow the trader for this curve to reach its crescendo. While the wait for the ultimate peak can be highly tempting, it could be incredibly fraught as well. Thus, selling some portion when the curve is assuming its peak is the most peddled out advice as per some traders. It suggests that you buy during the troughs and sell at the time of the crests.
Cutting Your Losses
Potentially effective measures are often not easy ones because of their counterintuitive nature. The same can be said for cutting your losses approach as well. This strategy may require you to do away with your bias regarding any specific investment that you might have. The cryptocurrency trading domain is not loyal to any of the cryptocurrency denominations that are a part of it. In this scenario, a trader’s bias regarding any particular denomination based on past trends is detrimental from a business perspective. In a situation like this, the trader is expected to be highly flexible regarding their investment and bartering fronts. The cutting your losses approach may expect the trader to have fluid inter-currency portions to minimize their losses.
Balancing Your Portfolio
In every cryptocurrency trading scenario, balancing your portfolio can assume utmost importance. In order to combat the notorious fluctuations of the cryptocurrency market this move may become highly important. Punctuating your long term holdings with occasional day trading schemes may render the requisite balance to your market portfolio. Another measure that can smoothen out your trading endeavors is an investment in diverse fronts. A balanced portfolio can help traders negate the risk. It helps in adding some semblance of stability to a trader’s portfolio during volatile times.
Trading Mistakes To Avoid
While the world of cryptocurrency trading can be incredibly lucrative, it has its own share of red flags as well. One such noticeable loophole can be a trader’s tendency to overtrade. Even with the help of multiple guides, the art of cryptocurrency trading can be based “more on logic and intuition than algorithms”. In this particular setting, people with questionable disposable income often find themselves staring at the wrong end of the barrel. Another prominent red flag is identified in the gross lack of research at the trader’s end. Often investors treat their peers’ advice as to the word of the gospel and indulge in investments that may lead to irrecoverable losses. Lack of knowledge of various exchange platforms and market trends can result in clouded business judgments.
The exchanges of cryptocurrency trading are as competitive as any traditional trading platforms. In order to make it potentially more accessible, there are multiple exchange platforms that are cropping up. Torex crypto trading platform has developed several tools that can be considered by traders. Their diverse trading tools that allow you to track cryptocurrency rates on different exchanges in one console are expected to be particularly advantageous to a trader. Moreover, Torex has diverse trading options like API-trading, arbitrage trading and copy trading. Thus, you can choose the option that suits you best and also leverage the advanced analytics that Torex has to offer. Their cross-platform services make them one of the important figures in this space. All of this ensures that Torex is uniquely poised as a comprehensive trading platform. As an upcoming crypto trader, you should open an account on Torex to leverage its diverse functionalities in the cryptocurrency domain. Additionally, their centralized paralleled monitoring renders much-needed credibility to the entire state of affairs.